CHAPTER 10

Managing
Organizational
Structure and
Culture

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 Learning Objectives
1. Identify the factors that influence managers’ choice
of an organizational structure.
2. Explain how managers group tasks into jobs that are
motivating and satisfying for employees.
3. Describe the types of organizational structures
managers can design, and explain why they choose
one structure over another.
4. Explain why managers must coordinate jobs,
functions, and divisions using the hierarchy of
authority and integrating mechanisms
5. List the four sources of organizational culture, and
explain why and how a company’s culture can lead to
competitive advantage.

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 Organizational Structure

Organizational architecture
• The organizational structure, control
systems, culture, and human
resource management systems that
together determine how efficiently
and effectively organizational
resources are used

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 Designing Organizational
Structure
(1 of 4)

Organizing
• Process by which managers establish
the structure of working relationships
among employees to allow them to
achieve an organization’s goals
efficiently and effectively

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 Designing Organizational
Structure
(2 of 4)

Organizational
structure
• Formal system of
task and reporting
relationships that
coordinates and
motivates
organizational
members so they
work together to
achieve
organizational
goals
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 Designing Organizational
Structure
(3 of 4)

Organizational design
• The process by which managers
create a specific type of
organizational structure and culture
so that a company can operate in the
most efficient and effective way

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 Figure 10.1 Factors Affecting
Organizational Structure

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 Designing Organizational
Structure
(4 of 4)

The way an organization’s structure

works depends on the choices
managers make about:
1. How to group tasks into
individual jobs.
2. How to group jobs into functions
and divisions.
3. How to allocate authority and
coordinate functions and
divisions.
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 Grouping Tasks into Jobs:
Job Design
Job design
• Job Design is the process by which
managers decide how to divide tasks
into specific jobs (division of labor).
• The appropriate division of labor
results in an effective and
efficient workforce.

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 Job Design

Job simplification
• The process of reducing the number
of tasks that each worker performs
Job enlargement
• Increasing the number of different
tasks in a given job by changing the
division of labor
Job enrichment
• Increasing the degree of
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responsibility a worker has over a job
 Job Enrichment

1. Empowering workers to
experiment to find new or better
ways of doing the job
2. Encouraging workers to develop
new skills
3. Allowing workers to decide how
to do the work
4. Allowing workers to monitor and
measure their own performance
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The Job Characteristics Model (1
of 2)

Skill variety
• Employee uses a wide range of skills.
Task identity
• Worker is involved in all tasks of the
job from beginning to end of the
production process.
Task significance
• Worker feels the task is meaningful
to the organization.
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The Job Characteristics Model (2
of 2)

Autonomy
• Employee has freedom to schedule
tasks and carry them out.
Feedback
• Worker gets direct information about
how well the job is done.

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 Grouping Jobs into Functions

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 Functional Structure (1 of 2)

Advantages
• Encourages learning from others
doing similar jobs
• Easy for managers to monitor and
evaluate workers
• Allows managers to create the set of
functions they need in order to scan
and monitor the competitive
environment

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 Functional Structure (2 of 2)

Disadvantages
• Difficult for departments to
communicate with others
• Preoccupation with own department
and losing sight of organizational
goals

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 Divisional Structures

Divisional structure
• An organizational structure
composed of separate business units
within which are the functions that
work together to produce a specific
product for a specific customer
• Product, geographic, market

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 Figure 10.3 Product,
Geographic, and Market
Structures

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 Types of Divisional Structures (1
of 3)

Product structure
• Managers place each distinct
product line or business in its own
self-contained division.
• Divisional managers have the
responsibility for devising an
appropriate business-level strategy
to allow the division to compete
effectively in its industry or market.
• GlaxoSmithKline groups research
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into 8 product divisions to focus on
 Product Structure

• Allows functional managers to

specialize in one product area
• Allows division managers to
become experts in their area
• Removes need for direct
supervision of division by
corporate managers
• Allows divisional management to
improve the use of resources
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 Types of Divisional Structures (2
of 3)

Geographic structure
• Divisions are broken down by
geographic location.
Global geographic structure
• Managers locate different divisions
in each of the world regions where
the organization operates.
• This generally occurs when
managers are pursuing a multi-
domestic strategy.
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 Figure 10.4 Global Geographic
and
Global Product Structures

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 Types of Divisional Structures (3
of 3)

Market structure
• Groups divisions according to the
particular kinds of customers they
serve
• Allows managers to be responsive to
the needs of their customers and act
flexibly in making decisions in
response to customers’ changing
needs

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 Matrix Design Structure

Matrix structure
• A matrix structure is an
organizational structure that
simultaneously groups people and
resources by function and product.
• The structure is very flexible.
• Each employee has two bosses.

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 Matrix Structure

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 Product Team Structure (1 of 2)

Product team structure

• Structure in which employees are
permanently assigned to a cross-
functional team and report only to
the product team manager or to one
of the manager’s direct subordinates
• Does away with dual reporting
relationships and two-boss managers

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 Product Team Structure (2 of 2)

Cross-functional team
• A group of managers brought
together from different departments
to perform organizational tasks
• Example: Sealy’s cross-functional
team designs a new mattress outside
hierarchy

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 Figure 10.5 Product Team
Structure

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 Allocating Authority (1 of 3)

Authority
• Power to hold people accountable for
their actions and to make decisions
concerning the use of organizational
resources
Hierarchy of authority
• An organization’s chain of command,
specifying the relative authority of
each manager

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 Allocating Authority (2 of 3)

Span of control
• The number of subordinates who
report directly to a manager

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 Allocating Authority (3 of 3)

Line manager
• Someone in the direct line or chain of
command who has formal authority
over people and resources at lower
levels
Staff manager
• Someone responsible for managing a
specialist function, such as finance
or marketing

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 Tall and Flat Organizations (1 of 2)

Tall structures have many levels of

authority and narrow spans of
control.
• As hierarchy levels increase,
communication gets difficult,
creating delays in the time being
taken to implement decisions.
• Communications can also become
distorted as they are repeated
through the firm.
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 Tall Organizations

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 Tall and Flat Organizations (2 of 2)

Flat structures have fewer levels

and wide spans of control.
• Results in quick communications
but can lead to overworked
managers

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 Centralization and
Decentralization of Authority
Decentralizing authority
• Giving lower-level managers and non-
managerial employees the right to
make important decisions about how
to use organizational resources
• Flexible and responsive

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 Integrating Mechanisms

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 Organizational Culture (1 of 3)

Organizational culture
• The shared set of beliefs,
expectations, values, and norms that
influence how members of an
organization relate to one another
and cooperate to achieve
organizational goals
• Organizational values: the shared
standards that its members use to
evaluate whether they have helped
the company achieve its vision and
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 Organizational Culture (2 of 3)

Organizational culture
• Organizational norms: specify or
prescribe the kinds of shared beliefs,
attitudes, and behaviors that its
members should observe and follow
• Informal, but powerful, rules about
how employees should behave or
conduct themselves

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 Figure 10.9 Sources of an
Organization’s Culture

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 Organizational Culture (3 of 3)

Organizational ethics
• The moral values, beliefs, and rules
that establish the appropriate way
for an organization and its members
to deal with each other and with
people outside the organization

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 Employment Relationship

Human resource policies

• Can influence how hard employees
will work to achieve the
organization’s goals
• How attached they will be to the
organization
• Whether or not they will buy into its
values and norms

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 Strong, Adaptive Cultures
Versus
Weak, Inert Cultures
Adaptive cultures
• Values and norms help an
organization to build momentum and
to grow and change as needed to
achieve its goals and be effective.
Inert cultures
• Those that lead to values and norms
that fail to motivate or inspire
employees
• Lead to stagnation and often failure
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 Video: The Container Store

The Container Store provides

significantly more training for its
employees than the industry norm. How
does this training impact job enrichment
at The Container Store?

Employees at The Container Store have a

5-minute "huddle" every morning. What is
the purpose of this meeting, and how
does it reinforce the culture of the
organization?
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